Alberta will lead the country with the highest annual growth rate in prices over the next two years in the resale housing market, says a new report released Monday by the Canadian Real Estate Association.
CREA’s report said average MLS sale prices will climb in the province by 3.9 per cent this year to $396,000 and by another 2.5 per cent in 2015 to $406,000.
Nationally, prices are expected to rise by 3.8 per cent this year to $397,000 and by 1.1 per cent in 2015 to $401,400.
The association said Alberta will see annual sales activity increase by 0.8 per cent this year to 66,600 and then lead the country in 2015 with 3.9 per cent growth to 69,200 sales.
It said Canadian MLS sales growth is expected to be 1.3 per cent in 2014 to 463,700 units and 1.2 per cent in 2015 to 469,400 units.
In its report, CREA said Calgary continues to lead the country with 9.10 per cent year-over-year growth in the MLS Home Price Index in February compared with the national aggregate of 5.05 per cent for the 11 major centres surveyed.
Robert Kavcic, senior economist, with BMO Capital Markets, said Calgary’s housing market is “heating up quickly again” and the 3.5 months’ supply of inventory across Alberta matching the lowest level since 2007.
He said the benchmark prices in the city surpass the 2007 peak, “with a strong economy, demographics and tight supply helping.”
Robert Hogue, senior economist with RBC Economics, said Calgary and Edmonton are still among the few areas in the country “where supply appears to be tight relative to demand.”
In February, MLS sales in Calgary rose by 14.1 per cent from a year ago to 2,363 units. They were up by 1.8 per cent in Alberta to 4,595 and by 1.9 per cent in Canada to 31,677.
The average MLS sale price in February saw yearly increases of 4.9 per cent in Calgary ($460,338), 7.6 per cent in Alberta ($407,540) and 10.1 per cent in Canada ($406,372).
Diana Petramala, economist with TD Economics, said the overall Canadian existing home market continued to show signs of a soft landing in February as sales are 9.3 per cent below the peak levels reached in August 2013.
“The performance of Canada’s housing market over the last few months is largely reflective of a cooling in Canadian housing demand,” said Petramala. “Sales are moving at a pace that is neither too hot, nor too cold. A drop in interest rates over the first two months this year . . . will likely help contribute to a modest pick-up in sales activity in the months ahead, but activity is likely to remain below the robust pace of the last five years.
“The only thing that has not happened yet is a slowing in Canadian home price growth – but that too will likely come. For one, home price growth is being supported by too few homes for sale in many major markets – giving sellers more of the bargaining power.”